MUNICIPAL LEADERS are angry at Governor Patrick’s proposal to trim a total of $9 million from unrestricted aid to localities as a way to cope with the state’s midyear budget shortfall. It’s a tough message for local officials to hear, since it comes on top of $28.7 million in targeted cuts to specific accounts, including school transportation.
But local officials are no longer helpless in the face of cuts in local aid, thanks in large part to initiatives of the Patrick administration. The most important has been municipal health care reform, which has given cities and towns flexible ways to dramatically reduce the costs of coverage for their employees. Municipalities also can opt to generate local revenues through taxes on meals and hotel occupancies — tools that raised about $220 million in fiscal year 2012. The state Department of Revenue points out that communities are leaving millions of dollars on the table by not exercising local-option taxes on meals.
The Patrick administration isn’t being cavalier about the cuts. It recognizes the need for mayors and selectmen to provide adequate city services, including police and fire protection, during economic downturns. Jay Gonzalez, the state’s secretary of administration and finance, is urging the Legislature to steer any Lottery revenues that exceed estimates directly to the unrestricted local aid accounts of cities and towns. Better yet, the state should commit to restoring the unrestricted local aid should general revenues exceed estimates.
For now, though, the state is looking at a $540 million shortfall. The executive branch is doing its part by by absorbing cuts on a par with losses in unrestricted local aid. The administration is also tapping an additional $200 million from the state’s rainy day fund. To take more from reserves, as some local officials suggest, would be irresponsible. The state has been dipping into the account for several years now, and may have to do so again in the next year or two if the economy remains weak.
Local officials know that their fortunes rise and fall with the state economy. They’re quick to object when their local aid is cut. Yet they are often slow to craft their own solutions, such as regionalizing services. The mid-year cut is unfortunate and unwelcome. But it should serve as a reminder that the best way for towns to protect local services is to find their own savings.